Promissory Note for Down Payment?

[Adam Budgin]

Hi BP,

I'm looking for guidance on how promissory notes can and cannot be used for acquisitions.  I have a few sources of private money I can tap into, and I'm somewhat confused on how I can make the most of the private money available.  I'm highlighting the two scenarios I find myself in below, and looking for some guidance here:

1)  Source enough private money to completely fund a property/deal.  I'd be working with my lawyer on drafting the promissory note as there would be multiple lenders involved in this situation.  The properties identified for this route would be value-add with a cash-out refinance or sell the property as an exit strategy.  

2) Source enough private money to fund a down payment on a property.  Let's assume the property is 4 unit or less for the sake of maintaining consistency with residential loans.  Same strategy as above - but my questions arise with how a promissory note and/or deed of trust typically work with a mortgage.  Would this essentially be considered a secondary lien on the property or is it viewed differently by the bank?  Most banks I've talked to (local banks) are not allowing a secondary lien on the property (at closing at least).  Is there a work-around here?   Thus far, this seems to be a non-negotiable with the banks I've talked to.  Any guidance here is appreciated!